"Geogeoikseon" Midsize and Large Officetel Boom... Polarization with Small Units Deepens

Office-tel Sales Over 85㎡ Increase 4.16% This Year
Heating Regulation Easing Expected to Boost Popularity of Medium and Large Units

On the afternoon of the 25th of last month, a sales completion promotional banner was displayed on the exterior wall of the model house of 'Bukcheongra Prugio Traciel Officetel' in Seo-gu, Incheon.

Due to the apartment supply shortage and regulations, residential demand is massively shifting to officetels as alternatives, highlighting a polarization phenomenon by officetel size. While demand for small officetels under 40㎡ (exclusive area), which have been the market mainstream, has decreased, medium-to-large officetels similar in size to apartments are experiencing a sharp rise in subscription competition rates, transaction volumes, and price increases. In particular, the government's relaxation of the floor heating allowance area for officetels from 85㎡ or less to 120㎡ or less is expected to further boost the popularity of medium-to-large officetels.

According to the Korea Real Estate Board on the 12th, the average sale price of officetels over 85㎡ in Seoul rose 4.16%, from 1,059.83 million KRW in January to 1,103.01 million KRW in September. This is a remarkable increase compared to other sizes.

During the same period, the average sale price of small officetels under 40㎡, designed as one-room or 1.5-room units, increased by only 0.6%, from 186.73 million KRW to 187.86 million KRW. Compared to the 2.12% increase for 40㎡ to 60㎡ units and 3.85% for 60㎡ to 85㎡ units, this is a relatively low rise. A similar pattern is observed nationwide. While units under 40㎡ rose only 0.4% during this period, those between 40 and 60㎡ increased by 3.6%, and 60 to 85㎡ units jumped 7.4%, showing that prices rise more steeply with larger areas.

Medium-to-large sizes are also popular in the subscription market. According to the results of nationwide officetel subscriptions through the subscription website from the beginning of this year to October, 63.4% of the total 429,595 applicants, or 272,561 people, applied for units sized 84㎡.

An industry insider said, "Officetels sized 84㎡ have floor plans similar to apartments," adding, "However, unlike apartments, they do not have a mandatory residence requirement and have fewer subscription and loan regulations, attracting strong demand."

Officetels have lower eligibility requirements and loan restrictions compared to apartments. This stimulates the homeownership mindset of the 2030 generation, who often identify as ‘Cheongpo-jok’ (subscription quitters). There is no need to use a subscription savings account, and anyone aged 19 or older can apply regardless of residence restrictions or homeownership status. Moreover, registering as a rental business operator is possible, allowing various tax benefits, which also attracts investors who have not found other investment options.

This trend is clearly reflected in the increase in transaction volume. According to an analysis of actual transaction data from the Ministry of Land, Infrastructure and Transport by real estate research firm RealToday, the number of officetel sales transactions in Seoul from January to October this year surged 31.9% year-on-year to 15,546 cases. Construction companies are also reducing the proportion of small-sized units in response to changing demand. According to Real Estate R114, the proportion of officetel units over 40㎡ in newly supplied complexes increased from 28.6% in 2019 to 34.4% in 2020.

The government's regulatory easing is expected to further accelerate the polarization of demand between small and medium-to-large officetels. This is because the Ministry of Land, Infrastructure and Transport relaxed the floor heating allowance area for officetels from 85㎡ or less to 120㎡ or less just the day before. With this measure, not only newly built officetels but also existing ones that meet the size criteria can install ondol (underfloor heating) or electric heaters through floor construction.

However, caution is advised. Kwon Il, head of research at Real Estate Info, advised, "In regulated areas, officetels with 100 or more units are prohibited from resale until ownership transfer registration, and a 4% acquisition tax is imposed regardless of the number of houses owned, so these points should be noted."

This content was produced with the assistance of AI translation services.